Gartner: Get Ready for 2020's 'Digital Industrial Economy'

By 2020, every company will be an IT company and every leader will be a digital leader, said Peter Sondergaard (above), Gartner SVP and head of research, opening the annual Gartner Symposium. By 2020, he predicts, "digital is the business; the business is digital."

By 2020, every company will be an IT company and every leader will be a digital leader, said Peter Sondergaard (above), Gartner SVP and head of research, opening the annual Gartner Symposium. By 2020, he predicts, "digital is the business; the business is digital."

I've been attending Symposium for years and every year it's interesting to see how the firm tries to reframe the continuous issues facing CIOs and other technology leaders while adding something new. This year, what stood out to me was the emphasis on business transformation and the "Internet of Things," how "cloud computing" is more of an assumption than a focus, and the notable absence of social computing.

"Transformation into the digital world isn't a question of if, it's a question of how fast," Gartner CEO Gene Hall said earlier, introducing the keynote. He recapped Gartner's focus on the "nexus of forces"—social, mobile, cloud, and information—and how it has changed organizations from the music business to most industries and governments.

Hall said in the company's recent survey of CEOs that only one-third said they had a digital strategy integrated with their business strategy. This, he said, is where CIOs and other technical senior executives can help.

Sondergaard, who headed the actual keynote, focused on the theme of the "digital industrial economy," saying in this transformation, technology leaders will be responsible for five core enterprise capabilities. These are the digital technology architecture dealing with the entire organization; the enterprise information architecture; cyber security and risk; the industrialized IT ecosystem inside and outside your organization; and digital leadership, ensuring that all business leaders are ready for the changes.

There are three big challenges to overcome in order to get there, he said. These include digitization of all aspects of your business; dealing with your suppliers, who will be going through their own transformations; and dealing with information, both big data and cyber security and risk.

Among the specific technologies he focused on were robotics and smart machines. By 2020, he said one in three knowledge workers will be replaced by smart machines.

Sondergaard also focused on the "Internet of Everything." In 2009, there were 1.6 billion personal devices and 0.9 billon sensors in various things; by 2020, he said there will be 7.3 billion personal devices and 30 billion sensors in things, ranging from jewelry to appliances. The Internet of Things will add $1.9 trillion of value, he said, changing just about every business, especially healthcare, insurance, agriculture, and transportation.

In fact, he said, the boundaries between industries will cease to exist and your biggest competition in 2020 is probably not in your industry today. By 2020, all products costing more than $100 should have sensors embedded and should offer services on top of the products.

He expects "accelerated leadership changes" and that companies like Cisco, Microsoft, and Oracle may not be the leaders in the new economy. Two- thirds of CIOs expect to change primary suppliers by 2017.

By 2020, 83 percent of the devices sold will be mobile phones, tablets, and ultramobiles, rather than traditional PCs, making mobile the complete focus. Data centers will also change, he said. Today about 80 percent of data centers are private and 20 percent public; by 2017, he said public will grow to about 35 percent, with 20 percent spent on"hyperscale" datacenters.

"When the nexus of forces meets the Internet of Everything, big data explodes," Sondergaard said. The effective digital business harnesses data from mobile devices and the Internet of Everything to raise new questions and provide new answers, he said. The big problem is skills and the lack of people who know how to take business advantages of big data.

He also talked about the big need for a focus on cyber security, as the security of embedded technologies may be the most important operational responsibility you have in 2020. By 2020, Gartner expects at least one consumer product manufacturer will be sued by the government over a data breach. He believes organizations will need to build a portfolio of security vendors.

We have a "crisis in IT leadership," Sondergaard said, with half of CEOs asking for better delivery of IT, but only 10 percent of CIOs think they have a delivery problem. In the transition to the digital world, he said, more organizations are turning to new leaders with titles such as chief digital officer, or chief data officer, and this will increase over the next few years. He noted that 70 percent of marketing organizations have a chief technology officer independent of the traditional IT organization.

Organizations aren't willing to wait for IT, so these new leadership digital roles have emerged, he said, but roles like chief digital officers will actually disappear by 2020. In general, these are change agents who will have fulfilled their roles by 2020, and digital skills will be assumed for all business leaders. CIOs may lose authority in this world unless they act now to build new skills and lead in the transition, he said.

In summary, CIOs need to shift our focus beyond technology and emphasize what is constant: the organization's relationship with customers, suppliers' partners, and employees.

Internet of Everything

Following this up, Gartner Fellow Hung Le Hong focused more on the "Internet of Everything," describing a world where the majority of messages come from buildings, vehicles, and city infrastructure. Imagine locks on doors and furniture cabinets, changing HVAC system, and parking lots (with cars autonomously changing parking lots to find the best rate).

Le Hong said organizations should digitize business processes, pursue digital business models, and compete for "business moments." For example, this is blurring the lines between industries, with Nike starting to offer health products and Google experimenting with autonomous cars. He noted how the hotel business is starting to compete with Airbnb, where what is available changes from moment to moment.

Nick Jones, a Gartner distinguished analyst, gave more details on the Internet of Things and smart objects. He expects every light bulb, and every appliance to be smart because if a processor costs only 50 cents, why wouldn't you make everything that costs more than a few dollars smart?

Jones' examples included a smart basketball with sensors in it, a smart thermometer, and diapers that alert your smartphone when they need changing.

He spent a lot of time explaining how a maker of chairs might know when chairs are occupied, when users are uncomfortable, and even when they are broken (perhaps sending instructions that show a user how to 3D print a replacement part). In time he imagines "furniture as a service." His nightmare, he said, is when the chair notices he is gaining weight, communicates that to his Nike FuelBand, and then schedules an extra half hour of walking.

He was also very bullish on 3D printing, saying by 2018, at least seven of the world's top 10 manufacturers will have deployed this.

He thinks analytics will be increasingly important but said there are two problems. First is the sheer volume of data, with things like self-driving cars generating 750MB of data per second. Second, is the need for decisions to happen based on the analytics. We don't have enough people, he said, so we'll use computers to make decisions. "Every year, computers do more things we used to need people for," he said, noting examples such as IBM Watson, Google's autonomous cars, and autonomous trucks used in mining. Every company is a technology company, he said, so he urged the audience to embrace technology and become the best technology company you can be.

Digital is not an add-on or an afterthought, Gartner fellow Dave Aron said, but embedded in everything we do. As a result, he said, we need 360-degree digital leadership, with each business needing its own digital strategy, rather than relying on "vanilla" plans.

Businesses need to address "two speed IT leadership"—running the traditional applications as efficiently as possible, but looking for fast, agile, "just safe enough" technology for moving into the digital world using not only agile software development, but also partnering with smaller and more innovative enterprises.

CIOs need to move from managing the IT infrastructure to becoming an information and technology leader for the whole organization; help enable the digital future with new business models; and innovate by looking at crowdsourcing and smaller organizations.

Like Sondergaard, he said many organizations will have a chief digital officer focused on helping the CEO and the board understand how should we survive and thrive in an increasingly digital world. This might be a CIO, but may not be because the focus is so different, he said. Aron suggested that CIOs "be the digital storyteller" for their business, helping business leaders become digital leaders. This will take information, influence, and courage, he said.

Michael J. Miller's Forward Thinking Blog: forwardthinking.pcmag.com
Michael J. Miller is chief information officer at Ziff Brothers Investments, a private investment firm. From 1991 to 2005, Miller was editor-in-chief of PC Magazine, responsible for the editorial direction, quality and presentation of the world's largest computer publication.
Until late 2006, Miller was the Chief Content Officer for Ziff Davis Media, responsible for overseeing the editorial positions of Ziff Davis's magazines, websites, and events. As Editorial Director for Ziff Davis Publishing since 1997, Miller took an active role in...
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